15 Top Benefits of E-Invoicing for Malaysian SMBs: Streamline Operations & Boost Efficiency

The digital economy around the world has been growing steadily in the last few years. Businesses and governments are shifting to paperless operations in a bid to embrace digital transformation.

The Inland Revenue Board of Malaysia (IRBM) announced the implementation of e-invoicing to enhance the transparency and efficiency of Malaysia’s tax administration and streamline invoicing processes. The authority intends to implement the initiative in phases.

Businesses with an annual turnover exceeding RM100 million are required to adopt the system by 1 August 2024, companies with an annual turnover of between RM25 million and RM100 million are needed to start using e-invoices by 1 January 2025, and all taxpayers are required to start using e-invoices by 1 July 2025.

Adopting e-invoicing will enable small and medium-sized business owners in Malaysia to receive numerous benefits. In this article, we will explore these benefits in detail.

1. Cost savings

Small and medium enterprises have tighter budgets than large corporations. Therefore, they look for multiple ways to achieve cost savings. One of the easiest ways Maylasian SMBs can lower their operational costs is by adopting e-invoicing.

If your business uses traditional invoicing methods, you must regularly buy envelopes, papers, stamps, and ink to prepare invoices. You also need physical storage space to keep your files.

The more time passes, the more the files increase. This means that you must increase your storage space, which translates to more rental costs. The increasing costs can be challenging for small and medium enterprises in Malaysia with limited resources.

On the other hand, the e-invoicing process eliminates the need to keep printing invoices, allowing businesses in Malaysia to save on costs associated with printing documents. Additionally, e-invoices are stored in the cloud; hence, you don’t need to spend money on physical storage spaces.

According to research, e-invoicing can reduce invoicing costs by 60%-80%. A business can easily steer itself to profitability by reducing its costs and enhancing efficiency.

2. Improved accuracy

Conventional invoicing involves entering data manually, which is time-consuming and tiring. Also, human errors, such as typos and miscalculations, can easily occur while your employees manually type or copy information as they prepare invoices.

These mistakes can result in costly disputes, delayed payments, legal issues, and strained relationships with your clients. These issues have severe consequences for any SMB that is trying to carve its niche in the market.

Conventional invoicing also involves a lot of handling during printing and storage. Poor storage and excessive handling can result in creases and tears that may increase the risk of errors.

When your company starts using e-invoicing in Malaysia, the need to enter data manually is eliminated, thus lowering the risk of human errors. E-invoicing systems use standardized formats to reduce the likelihood of mistakes. These systems can flag errors in real-time, thus preventing costly disputes.

Additionally, the systems capture and enter accurate invoice details using data extraction technologies and perform automatic calculations for discounts, taxes, and invoice totals, thus reducing the risk of errors associated with entering data manually.

E-invoicing also lowers the number of times your workers handle invoices manually, preventing tears and creases.

3. Faster payments

Steady cash flow is important for any business. Every business owner wants shorter payment cycles for the goods or services they provide. Unfortunately, errors that arise during manual data entry can result in a lot of back-and-forth between the business and the clients in a bid to rectify the errors. This back-and-forth lengthens the payment process, thus denying your business the much-needed cash flow.

In addition, if your employees forget to remind clients when their invoices are due or overdue in conventional invoicing, it may take your business longer to receive money from your clients.

Digital invoicing improves operational efficiency, reduces administrative burden, and allows your business to enjoy improved cash flow by eliminating invoice errors and automatically sending reminders to your customers when their invoices are due or overdue. This helps to facilitate faster payments.

4. Enhanced security

Paper invoices can be lost or stolen. Losing these documents exposes your company’s sensitive financial information or that of your clients and suppliers to malicious individuals. Additionally, if a fire accident occurs, you can lose a lot of vital information.

On the other hand, digital invoicing offers robust security features, such as secure data transmission and data encryption, which help safeguard sensitive financial data.

E-invoicing systems also come with authentication protocols and digital signatures to protect your business from invoice fraud. These enhanced security features build your suppliers and clients' trust, as they are aware that their financial data is handled responsibly. E-invoicing also ensures your documents are safe in the event of a fire accident.

5. More environmental benefits

The conventional invoicing process involves a lot of paperwork. This means more trees need to be cut down to produce the required papers.

If people fail to dispose of paperwork responsibly, the papers pollute the environment. Also, the means of transport relaying your invoices produces harmful carbon emissions.

When your company shifts to digital invoicing, it helps to save the environment because no trees need to be cut down to produce papers. Additionally, the e-invoices are sent through the Internet; hence, no means of transport is required. This translates to reduced carbon emissions.

Adopting environmentally friendly business practices enhances your company’s reputation and enables the company to gain a competitive edge over rivals. This can make your business qualify for green business tax credits and grants.

6. Improved compliance with tax laws

E-invoicing platforms are designed to boost tax compliance, allowing Malaysian businesses to meet their compliance requirements. These systems ensure that vital information, such as correct tax rates and tax identification numbers, are included in the e-invoice before invoice issuance. Automating tax compliance simplifies tax filings and helps your company avoid potential penalties enforced by tax authorities.

7. Better record-keeping and audit readiness

Traditional invoicing involves keeping invoices in files. As time goes by, the invoices accumulate. Imagine how challenging it can be trying to retrieve a particular document during an audit process from the files that have accumulated over the years, especially if the files are not arranged well.

E-invoicing in Malaysia solves this problem by storing your invoices electronically. You can easily access these electronic documents and track payments by just clicking a button.

8. Enhanced supplier relationships

One of the common causes of disputes between suppliers and many businesses is errors in the invoice. Entering data manually may result in errors such as missing information, tax issues, and incorrect amounts.

Automating validation processes and data entry, e-invoicing eliminates errors in the e-invoice, thus strengthening business-to-business relationships.

Digital invoicing platforms also allow suppliers to track their e-invoices and see when they have been received, processed, and paid. This reduces the need for suppliers to call often to inquire about the progress of the payment processes. By promoting transparency, e-invoicing strengthens relationships between Malaysian businesses and suppliers.

9. Seamless integration with accounting and ERP systems

You can easily link your e-invoicing platform to your accounting and ERP systems. This eliminates the need for manual data entry, thus lowering the risk of errors associated with entering data manually.

Furthermore, when you make changes in your invoicing data, the changes are reflected in all your financial systems, thus promoting smooth financial operations.

This integrated solution streamlines business processes and financial management because once the digital invoicing system processes an invoice, the action triggers other related processes, such as updating accounts payables.

10. Facilitates global trade

For Malaysian SMBs looking to gain market share and a competitive edge in new territory, conventional invoicing can slow down their ambitions. This is because manual processing may result in delays.

To avoid these delays, Maylasian SMBs should switch to electronic invoicing. E-invoicing platforms support multiple languages and currencies and make it easy for Maylasian business owners to transact with global partners.

11. Customizable invoice formats

For paper invoices, businesses rely on pre-printed templates. On the other hand, you can easily customize your e-invoice to suit your company’s needs. You can easily customize your branding, logo, and payment terms to meet your specific needs.

12. Increased scalability

As your business grows, so do your invoicing functions. E-invoicing platforms are highly scalable, as they accommodate more clients, suppliers, and transactions as your business expands.

13. Compliance with Malaysian government regulations

The IRBM requires every business to start using e-invoicing by 1 July 2025. The authority is making e-invoicing mandatory to increase national tax revenue, help companies save time and costs, ease transaction processes for international trade, and eliminate paper invoicing.

These Malaysian e-invoicing regulations require businesses to convert invoices, credit notes, debit notes, refund invoices, and self-billed invoices into electronic format. Some of the transactions that should be captured in the e-invoicing system include proof of income and proof of expenses.

While submitting your e-invoice to the IRBM, you are required to convert the invoices into JSON or XML format. You must also include information explaining the types of goods and services that have been transacted. Complying with these regulations will help your business enjoy a good business-to-government relationship.

14. Reduced time wastage during the invoicing process

Many manual tasks are involved in preparing and sending invoices in traditional invoicing. You have to type the invoice, print it, and take it to a mailing company.

The client may not receive the invoice for a day or two. This shows how much time is wasted on conventional invoicing.

When you shift to e-invoicing for SMEs, you can send digital invoices to your clients quickly. When you adopt e-invoicing, you reduce the time spent preparing invoices and focus on more strategic business operations.

15. Access to the Inland Revenue Board of Malaysia’s incentives

The IRBM is introducing e-invoicing in Malaysia in phases to give businesses enough time to adjust. It also says that it will grant a reduction in the capital allowance claim period from three years to two for the purchase of ICT to taxpayers who switch to e-invoicing before the deadline.

Takeaway: Adopt e-invoicing for your business in Malaysia for a streamlined process

With the Inland Revenue Board of Malaysia requiring all taxpayers to start using e-invoicing by 1 July 2025, adopting e-invoicing is not an option for Malaysian SMBs; it is necessary. This move by the Malaysian government intends to grow the digital economy more.

Fortunately, Malaysia e-invoicing comes with many features that enhance convenience, facilitate improved customer satisfaction, streamline operations, foster digital transformation, and boost efficiency.

As a Malaysian business owner looking to ensure compliance and take advantage of the digital economy, it may be challenging to know where to start when implementing e-invoicing for your organization. That’s where Storecove comes in to help you with the digital shift.

Storecove designs efficient digital solutions, such as an e-invoicing application programming interface, that enable you to receive or send invoices while maintaining full compliance with Malaysian laws.

The solutions are easy to use, ensuring business owners can send and receive invoices as quickly as possible.

Are you ready to embark on this digital transformation and start enjoying the benefits of e-invoicing? Contact us today and discover how we can help. Our team is on standby to help you make informed decisions.

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